BSP fully awards P90B in short-term bills

The Philippine central bank on Friday fully awarded P90 billion worth of 28-day bills at higher rates amid investor preference for retail Treasury bonds (RTBs).

Demand for the short-term securities reached P102.12 billion, more than the P90-billion offer but lower than P154.9 billion a week ago, according to e-mailed auctions results from the Bangko Sentral ng Pilipinas (BSP).

Yields for the central bank’s bills were 1.665% to 1.995%, wider than last week’s auction. This caused the average rate to hit 1.7303%, rising by 6.2 basis points.

“The auction results continue to broadly reflect market participants’ search for yield amid the ongoing offering of RTBs of the Bureau of the Treasury,” central bank Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The government is offering RTBs at a coupon rate of 2.375% from Feb. 9 until Mar. 4, unless ended earlier. The Treasury raised P221.218 billion earlier this month.

Yields in the term deposit facility also picked up on Wednesday.

The central bank uses both its securities and term deposits to mop up excess liquidity in the financial system and to better guide short-term market rates.

“The higher auction yield was also due to a weaker peso exchange rate recently that could lead to high import prices and overall inflation,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a text message.

The peso has been weakening in recent weeks as global oil prices rose due to supply disruptions in the US and with gradually increasing demand.